Market Overview

Countdown to Facebook's ETF Debut


Less than a week removed from its IPO, Facebook's (Nasdaq: FB) short lifespan as a publicly traded company can be described with myriad adjectives, none of which are positive. Controversial at best, overrated to say the least, Facebook has a lot of making up to do with investors as it now trades at $32 compared to its debut price of $38.

The less-than-auspicious Facebook IPO has been a thorn in the side of the Global X Social Media Index ETF (Nasaq: SOCL), the first ETF devoted exclusively to social media stocks and likely the first ETF where Facebook shares will find a home.

That's right. Facebook's fifth day of trading is today and at the end of the session, the Solactive Social Media Index, the index SOCL tracks, can rebalance to include Facebook. For SOCL's sake, Facebook's stock had better get its act together. Even though the stock still isn't part of the ETF, SOCL has dropped nearly 5% since Facebook came to market.

On the other hand, it must be noted that Facebook being a public company, despite the hurried, misguided and over-hyped IPO, has benefited SOCL in another way: Assets under management. When Benzinga highlighted SOCL the day before the Facebook IPO, the ETF had about $16 million in AUM. As of the close of markets on May 23, that number had swelled to over $25.1 million.

That number may not sound like much, but for any ETF to grow its AUM total by more than 50% in less than a week is impressive. SOCL's average daily volume leading up to the Facebook IPO was about 36,000 shares per day. Now it's over 50,100. Another impressive increase.

It can be argued that by waiting five days to add Facebook, SOCL may have missed a lot of the stock's volatility and, hopefully, the worst of its declines. Then again, SOCL's mettle will be tested and tested soon by Facebook with various lockup periods expiring over the next several months.

How well the stock and the ETF hold up through that selling and Facebook's first earnings report as a public company could validate both the shares and SOCL. When the stock enters the ETF tomorrow, it will probably be with a double-digit allocation. Facebook's current market cap is more than eight times that of LinkedIn's (NYSE: LNKD), SOCL's largest holding with a weight of nearly 11.6%.

For now, sit back and watch how SOCL trades tomorrow when Facebook enters the fray. After all, smart ETF investors don't want a repeat of last Friday.

For more more social media ETFs, please click HERE.

Posted-In: Long Ideas News Sector ETFs Short Ideas Specialty ETFs New ETFs Intraday Update Markets Best of Benzinga


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